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Why do markets adjust so quickly? If you really want to understand investment psychology & economics you really need to read the seminal book The Black Swan by Nassim Taleb. It is one of the two most influential books on my thinking about investments. In short, a Black Swan is an unexpected event (positive or negative) that was deemed unlikely and once it occurs investor sentiment can shift dramatically and immediately.

In September 2008 this was the bankruptcy of Lehman Brothers and the rippling effect was massive.